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me/LawCollegeNotes_Stuffs
631

24 Achyut Das v State of Assam AIR 1994 SC 968, (1994) Cr LJ 1119(SC) ; Narayan Prasad & Ors v State of Madhya Pradesh
(2006) Cr LJ 123(SC) .

25 (1972) Cr LJ 456 (SC).

26 State of Orissa v Venkuri (1986) Cr LJ 439(Ori) .

27 Lachman Ram v State of Orissa AIR 1985 SC 486, (1985) Cri LJ 753(SC) .

28 Adeluddin v Emperor AIR 1945 Cal 482. See also, Mahinder Singh v State (Delhi Administration) (1992) 2 Crimes 763(Del) ;
Shrichand & Ors v State of Madhya Pradesh (1996) Cr LJ 296(MP) ; Narayan Prasad v State of Madhya Pradesh (2006) Cr LJ
123(SC) .

29 Amar Singh v State of Madhya Pradesh AIR 1982 SC 129, (1982) Cr LJ 610(SC) .

30 Pawan Yadav v State of Bihar (2001) Cr LJ 3626(Pat) .

31 Abdul Wahed Ankujee v State of West Bengal (2006) CHN 331.

32 BN Singh v State of Uttar Pradesh AIR 1960 All 754.

33 Hastimal v State of Gujarat (1975) Cr LJ 983(Guj) ; Bhanwar Lal v State of Rajasthan (1995) Cr LJ 625(Raj) .

34 Ajendranath v State of Madhya Pradesh AIR 1964 SC 170, (1964) 1 Cri LJ 129(SC) .

35 Amar Nath v Emperor AIR 1935 Lah 587.

36 Emperor v Abdul Gani Bahaduri AIR 1926 Bom 71.

37 Ibid, para 17.36.

38 See, Law Commission of India, 'Forty-Second Report: The Indian Penal Code ', Government of India,1972, paras 17.36,
17.37 and 17.39.

39 See, Law Commission of India, 'One Hundred and Fifty Sixth Report: The Indian Penal Code', Government of India, 1997,
paras 12.73 and 12.74.

PSA Pillai: Criminal Law,12th Edition/PSA Pillai Criminal Law 2014/CHAPTER 45 Cheating

CHAPTER 45 117
415 +

416 + 419 + 420

Cheating

(Indian Penal Code 1860,Sections 415 to 420)

Section 415. Cheating.--Whoever, by deceiving any person, fraudulently or dishonestly induces the person
so deceived to deliver any property to any person, or to consent that any person shall retain any property, or
intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he
were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person
in body, mind, reputation or property, is said to "cheat".
Explanation.--A dishonest concealment of facts is a deception within the meaning of this section.
Illustrations

(a) A, by falsely pretending to be in the Civil Service, intentionally deceives Z, and thus dishonestly
induces Z to let him have on credit goods for which he does not mean to pay. A cheats.
(b) A, by putting a counterfeit mark on an article, intentionally deceives Z into a belief that this arti-
cle was made by a certain celebrated manufacturer, and thus dishonestly induces Z to buy and
pay for the article. A cheats.
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(c) A, by exhibiting to Z a false sample of an article, intentionally deceives Z into believing that the
article corresponds with the sample, and thereby dishonestly induces Z to buy and pay for the
article. A cheats.
(d) A, by tendering in payment for an article a bill on a house with which A keeps no money, and
by which A expects that the bill will be dishonoured, intentionally deceives Z, and thereby dis-
honestly induces Z to deliver the article, intending not to pay for it. A cheats.
(e) A, by pledging as diamonds articles which he knows are not diamonds, intentionally deceives
Z, and thereby dishonestly induces Z to lend money. A cheats.
(f) A intentionally deceives Z into a belief that A means to repay any money that Z may lend to him
and thereby dishonestly induces Z to lend him money. A not intending to repay it. cheats.
(g) A intentionally deceives Z into a belief that A means to deliver to Z a certain quantity of indigo
plant which he does not intend to deliver, and thereby dishonestly induces Z to advance money
upon the faith of such delivery. A cheats, but if A, at the time of obtaining the money, intends to
deliver the indigo plant, and afterwards breaks his contract and does not deliver it he does not
cheat, but is liable only to a civil action for breach of contract.
(h) A intentionally deceives Z into a belief that A has performed A's part of a contract made with Z,
which he has not performed, and thereby dishonestly induces Z to pay money. A cheats.
(i) A sells and conveys an estate to B. A, knowing that in consequence of such sale he has no
right to the property, sells or mortgages the same to Z, without disclosing the fact of the previ-
ous sale and conveyance to B, and receives the purchase or mortgage money from Z. A
cheats.
b diding any person fraudulently /dishonsty induces person to

furnishment
() deliur prop

&
any
(3).consent that a person shall retain any prop

u/417 auly
SCOPE OF SECTION 415 intentional doesn't need to intentially induces person decieved
I
2 so
C
1

to do omit to do
·

enough be
Fraudulent/dicha or

'Cheating' is defined in s 415, which can be put in its analytical form thus: (b) aut
·
or omission likely to causs damge/harm
Whoever, by deceiving any person: (1) fraudulently or dishonestly induces the person so deceived: (a) to
deliver any property; or (b) to consent that any person shall retain any property; or (2) (a) intentionally induc-
es the person so deceived to do or omit to do anything which he would not do or omit if he were not so de-
ceived; and (b) which act or omission causes or is likely to cause damage or harm to that person in body,
mind, reputation or property is said to 'cheat'.
In cheating, there should first of all be deception. By means of this deception, a man is deceived or cheated
in two ways as indicated in (1) and (2) at the outset. In (1), the victim is induced to deliver property. This de-
livery is indeed brought about as the result of fraudulent and dishonest means used by the accused. In (2),
there is no delivery of property, but the victim is intentionally induced to do or omit to do anything which he
would not do or omit, if, he were not induced--in short, he is induced to do something to his own prejudice.
Here, the inducement need not be fraudulent or dishonest; it is enough if it is intentional.
Thus, s 415 has two alternate parts, while in the first part the person must 'dishonestly' or 'fraudulently' in-
duce the complainant to deliver any property, in the second part, the person should intentionally induce the
complainant (the person so deceived) to do or omit to do a thing. To put in other words, in the first part, in-
ducement must be dishonest or fraudulent. And in the second part, inducement should be intentional. 'De-
ception' is common element in both the parts. It is, however, not necessary that deception should be by ex-
press words but it may be by conduct or implied in the nature of transaction itself.1
The main ingredients of s 415 which have to be proved to obtain conviction for cheating are: (1) for the First

I
Part: (a) the accused deceived some person; (b) by deception he induced that person; (c) the above in-
ducement was fraudulent and dishonest, and (d) the person so induced delivered some property to or con-
sented to the retention of some property by any person, and (2) for the Second Part: (a) the accused de--

ceived some person; (b) the accused thereby induced him; (c) such inducement was intentional; (d) the per-
son so induced did or omitted to do something; (e) such act or omission caused or was likely to cause dam-
age or harm to the person induced in body, mind, reputation or property.2

ESSENTIAL INGREDIENTS OF CHEATING

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A very succinct elaboration of the scope of the definition of cheating is to be found in the judgment of the Su-
preme Court in Hari Sao v State of Bihar .3 In this case, the appellants were alleged to have dishonestly in-
duced the station master of Sheonarayanpur railway station to make an endorsement in the railway receipt of
false particulars. The accused had obtained allotment of an entire rail wagon for the proposed consignment
of 251 bags of chillies to Calcutta. The accused themselves had loaded the wagon. A day after the wagon
had been sealed and made ready for dispatch, some seals were found broken. The railway authorities
checked the wagon and found only 197 bags, filled with chaff (bhusa), and not chillies, as mentioned in the
railway receipt, which was countersigned by the station master. The prosecution's case was that this was
part of a conspiracy to later on convert the rail receipt as valuable security, thereby committing the offence
punishable under s 420. The Supreme Court, while considering the case, elaborated on the essence of s 415
as follows:

... [A] person is said to cheat when he by deceiving another person fraudulently or dishonestly induces the person so
deceived to deliver any property to him or to consent that he shall retain any property or intentionally induces the per-
son so deceived to do or omit to do anything which he would not do or omit if he was not so deceived and which act or
omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property. 4

In Ram Jas v State of Uttar Pradesh ,5 the Supreme Court enumerated the essential ingredients required to
constitute the offence of cheating as follows:

[
(1) There should be fraudulent or dishonest inducement of a person by deceiving him;
(2)
(a) the person so deceived should be induced to deliver any property to any person, or to
consent that any person shall retain any property; or
(b) the person so deceived should be intentionally induced to do or omit to do anything
which he would not do or omit if he were not so deceived; and

(3) in cases covered by (2) (b), the act or omission should be one which causes or is likely to
cause damage or harm to the person induced in body, mind, reputation or property. 6

IMPORTANT INGREDIENTS OF DECEPTION AND INDUCEMENT

Deception
One of the initial ingredients which have to be proved to establish the offence of cheating is deception, 7
which must precede and thereby induce the other person to either (a) deliver or retain property; or (b) to
commit the act or omission referred to in the second part of s 415.8 Generally speaking, 'deceiving' is to lead
into error by causing a person to believe what is false or to disbelieve what is true, and such deception may
be by words or by conduct. A fraudulent representation can be made directly or indirectly.
Thus, in the case of Swami Dhirendra Brahmachari v Shailendar Bhushan ,9 the accused, Swami Brah-
machari, was held to have knowingly made false assertions to the effect that the yoga course run by him
through the Vishwayatan Yogashram was recognised by the Government of India, thereby inducing unwary
students to obtain admission paying Rs 1,000 by way of caution deposit, thereby cheating students. Since
the allegation against the accused was prima facie held to be made out in the complaint and material col-
lected by the investigating authority, the Delhi High Court refused to quash the criminal complaint of cheating
pending against him.
As to what act constitutes deception, has been held to be a matter of evidence in each case and dependent
upon the facts and circumstances of each case. However, the element of deception has been held to be the
first stage of establishing the offence of cheating. Thus, where there is no evidence of deception, then the
offence of cheating has been held not to be established. Similarly, deceit must have been practiced before
the property is delivered.10 The fraudulent or dishonest intention must be there at the time of making promise
or representation. Misrepresentation from the very beginning is a sine qua non of the offence of cheating. 11
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By virtue of explanation to s 415, a dishonest concealment of facts is tantamount to deception. Not all con-
cealment of material facts but dishonest concealment of facts amounts to deception. It does not necessarily
deal with illegal concealment of facts but with dishonest concealment of facts. 12 Concealment can be dis-
honest even in the absence of legal obligation or duty to speak.13

Wilful Representation and Cheating

It is a moot question as to whether wilful representation will by itself amount to cheating. However, where
there is wilful misrepresentation with intent to defraud, it has been held to amount to cheating. To establish
the offence, however, what is important is to see whether the misrepresentation was false to the knowledge
of the accused at the time when it was made.14

Cheating and Misappropriation

An interesting case came up in Shankarlal Vishwakarma v State of Madhya Pradesh .15 Here, a man tricked
another to deliver to him money, which was subsequently misappropriated. The offence did not amount to
criminal breach of trust, as the money received by him could not be considered to have been entrusted to
him, and had been obtained by the accused by tricking another person. In such circumstances, the offence
could only be said to be one of cheating.
Cheating differs from criminal misappropriation in the fact that the perpetrator has dishonest intention with
inducement (to take possession of the property) from the very beginning of his act . 16

Deception and Cheating in Connection with False Promise of Marriage

A commonly encountered issue is deception by men who dupe young girls and women with false assurance
of marriage and enter into sexual liaisons, only to subsequently refuse to honour the promise, thereby leav-
ing the women in the lurch. The question is as to whether such deception amounts to cheating under s 415,
IPC. In Mailsami v State of Tamil Nadu ,17 the Madras High Court had to consider the case of an accused
person who had made promises to marry a woman, and thereby got close to her and made her pregnant.
Subsequently, he put an impossible condition for marriage, namely, that she should terminate the six months'
pregnancy, and when the women did not consent for termination, he refused to marry her. The Madras High
Court held that all the ingredients of s 417 were established, including inducements, which made the victim
do something she would not otherwise have done. The high court, therefore, refused to quash the criminal
case pending against the accused. In coming to the conclusion, the high court relied on its earlier judgment
in Ravichandran v Mariyammal ,18 in which false representations had been made by the accused to the
women, who were taken in by the deception and consented to intercourse. Such acts were held clearly to
amount to offence of cheating under s 417, IPC.
However, it is necessary to prove that the promise to marry by the accused for inducing the complainant to
have sexual connection with him was false when he made it.19 The promise to marry must be with fraudulent
intention of not honoring it, and motivated with the desire to have sexual intimacy. 20

Inducement
The second essential ingredient to the offence of cheating is the element of 'inducement' leading to either
delivery of property or doing of an act or omission as pointed out earlier. Section 415 clearly shows that mere
deceit is not sufficient to prove the offence. Likewise, committing something fraudulently or dishonestly is
also not sufficient. The effect of the fraudulent or dishonest act must be such that it induces the person de-
ceived to deliver property or do something (in the form of an act or omission). Thus, in either of the two situa-
tions covered by s 415, the element of inducement leads either to delivery of property or doing of an act or
omission to do anything. Thus, in Shri Bhagwan Samardha Sreepadha Vallabha Venkata Vishwanandha
Maharaj v State of Andhra Pradesh ,21 the Supreme Court held that the representation made by the appel-
lant-accused (Swami BSSVVV Maharaj), that he had divine healing powers through his touches, thereby
making the complainant believe that he could cure his little girl of her congenital dumbness through his divine
powers was fraudulent and amounted to inducement. Thus, believing the promises, the complainant was
induced to believe in the divine powers and shell out money to the so-called Godman. The court elaborated
on the aspect of inducement:
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If somebody offers prayers to God for healing the sick, there cannot normally be any element of fraud. But if he repre-
sents to another that he has divine powers and either directly or indirectly makes that another person believe that he
has such divine powers, it is inducement referred to in Section 415 of the Penal Code. Anybody who responds to such
inducement pursuant to it and gives the inducer money or any other article and does not get the desired result is a vic-
tim of the fraudulent representation. The Court can in such a situation presume that the offence of cheating falling
within the ambit of Section 420 of the Penal Code has been committed. It is for the accused, in such a situation, to re-
but the presumption.22

Effect of Absence of Dishonest Inducement

In Dr Sharma's Nursing Home v Delhi Administration ,23 the prosecution case was that the complainant got
his brother admitted in the nursing home on assurance that air-conditioned rooms were available. However,
the room provided was not air-conditioned, though he was charged for such a room. The trial court held that
offence of cheating under ss 415 & 429, IPC, was established. The Supreme Court, however, found that the
complaint and other documents did not reveal dishonest inducement. It noted that while the lower courts had
given findings on the issue of deception, they had not examined whether the other essential ingredient of s
420, namely, dishonest inducement had been established. 'Dishonesty' has been defined in s 24, IPC, as
deliberate intention to cause wrongful gain or wrongful loss. If with such intention, deception is practiced and
delivery of property is induced, then the offence under s 420 can be said to have been committed. However,
in the above case, there was no material from which it could be held, even prima facie, that the appellant had
been 'dishonestly induced' to part with his money. Hence, the offence of cheating could not be said to have
been established.
In another case, the Supreme Court held that at the investigation stage itself, the high court should not sieve
the complaint to see whether all the necessary ingredients to make out the offence of cheating are present
and consequently quash the criminal proceeding. In Rajesh Bajaj v State NCT of Delhi ,24 the appel-
lant-complainant, Rajesh Bajaj, a garments manufacturer of Delhi, had made a complaint alleging that one
Gagan Kishore Srivastava, Managing Director of a German company that was engaged in import of gar-
ments, had approached him for purchase of garments and induced him to believe that the said Srivastava
would pay the price of the said sale on receiving the invoice. Such payment was promised to be paid within
15 days of receipt of invoice. However, he failed to do so, despite a visit of one of the complainant's repre-
sentatives to Germany. The complaint filed before the police was quashed by the Delhi High Court on the
grounds that: (i) there was nothing to show that the accused had dishonest or fraudulent intention at the time
of the export of goods; (ii) there was nothing to show that the complainant had been induced to export, based
on fraud and dishonesty on the part of the accused; and (iii) the entire transaction was civil in nature.
The Supreme Court, however, came to a different conclusion. Noting that it is not necessary that the com-
plainant should verbatim reproduce in the complaint all the ingredients of the offence, it was also not neces-
sary to state in so many words that the intention of the accused was dishonest or fraudulent. If factual basis
for the complaint had been laid in the complaint, then the courts should not hasten to quash criminal pro-
ceedings at the investigation stage itself. On the issue of inducement the apex court stated:

The crux of the postulate is the intention of the person who induces the victim of his representation and not the nature
of the transaction which would become decisive in discerning whether there was the commission of an offence or not. 25

The complainant had stated in the complaint itself that he was induced to believe that the accused would pay
the amount on receipt of invoices, and only later he realised that the intentions of the accused were not clear.
Further, the accused had sold the goods to others and still did not pay the money due. The Supreme Court
held that such averments would prima facie make out a case for investigation by the authorities.
It must be proved that the accused had dishonest intention right from the beginning. 26 Mere failure to keep his
promise by itself does not amount to cheating.27

CRITICAL ASPECTS RELATING TO THE OFFENCE OF CHEATING

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Dishonest Intention Should be Present at the Time of Making the Promise

It is necessary to consider that for the offence of cheating to be made out, the inducement by the accused to
the complainant must have been made in the initial or early part of the transaction itself. Here too, what is
important is to prove that at or about the time that the person induced was made to part with money, the re-
spondents (i.e., alleged accused persons) ought to have known that their representation was false and that
the representation was made with the intention of deceiving the other person. If this is not shown, then the
dispute is only civil in nature. Thus, in Hari Prasad Chamaria v Bhisun Kumar Surekha ,28 the Supreme Court
held that the fact that subsequent to the transaction, the respondents did not honour their promises would
only create a civil liability, and criminal liability cannot be fastened on the accused.

Absence of Intention to Honour the Promise at the Time of False Representation

The second crucial aspect to be noted is that the complainant has to show that at the time the alleged false
representation was made or the inducement offered by the accused, the accused had no intention of hon-
ouring the same. Otherwise, the entire transaction would only be civil in nature. However, if the accused had
no intention whatsoever to pay, but merely said that he would do so in order to induce the complainant to
part with the goods, then a case of cheating could be established. 29

Dishonesty is Causing Either Wrongful Gain or Wrongful Loss

A person can be said to have done a thing dishonestly when he does so with the intention of causing wrong-
ful gain to one person or wrongful loss to another person. Wrongful gain occurs when a person who is not
entitled to property acquires it through unlawful means; conversely, wrongful loss is loss of property sus-
tained by a person through unlawful means. Thus, there are two facets to the definition of dishonesty, and it
is sufficient to establish the existence of any one of them. There is no requirement in law to establish both. 30

False Pretence to be Inferred From Circumstances

False pretence need not be in express words for constituting offence of cheating. It can be inferred from all
the circumstances, including the conduct of the accused.31

Mens Rea as Essential Ingredient of the Offence of Cheating

In Anil Kumar Bose v State of Bihar ,32 the Supreme court held that a failure on the part of concerned em-
ployees to perform their duties or to observe rules of procedure laid down in the duty chart in a proper man-
ner, may be an administrative lapse on their part and may at the best amount to a case of error of judgment
or breach of performance of duty, which, per se, cannot be equated with dishonest intention. Mens rea is one
of the essential ingredients of the offence of cheating under s 420, IPC, and where mens rea is not estab-
lished no offence of cheating can be made out.33

ON THE ISSUE OF DAMAGES CAUSED OR LIKELY TO BE CAUSED

Damage to Body, Mind, Reputation or Property Caused or Likely to be Caused
The use of the term 'cause' in s 415 postulates a direct and proximate connection between the act or omis-
=

sion and the harm and damage to the victim.34 It excludes damage occurring as a mere fortuitous sequence,
unconnected with the act induced by deceit. On the other hand, the definition, as it stands, is wide enough to
include all damages resulting or likely to result as a direct natural or probable consequence of the induced
act .35 The loss or damage to the victim arising from the act of cheating must be proximate and not vague or
remote.36It must be a natural consequence of the act or omission in question and not a contingent one. 37
The critical aspect that has to be proved for establishing the offence of cheating is the fact that some dam-
age has been caused or that some damage is likely to be caused to body, mind, reputation or property.
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When no Damage Caused to Complainant

In the case of Hari Sao v State of Bihar ,38 the Supreme Court held that the false representation made by the
accused to the station master leading to his making endorsement on the receipt, could not, even if estab-
lished as a dishonest or fraudulent act, cause any damage or harm to the railway. Thus, no question of
cheating the railway or the station master arose. On this count, the accused were acquitted.
In Ramkrishna Babura Maske v Kisan Shivraj Shelke ,39 the Bombay High Court held the parents, who in-
duced the complainant to marry their daughter by concealing the fact of her pregnancy by someone else and
who delivered a baby after five months of the marriage, not guilty of cheating on the ground that there was
neither wrongful loss nor wrongful gain of property as a consequence of concealment.

When no Benefit Accrued to Accused but Loss to Complainant Company

A different dimension on this issue of causing or likely to cause damage as an element of the offence of
cheating was considered by the Supreme Court in Ram Prakash Singh v State of Bihar .40 In this case, an
employee of the Life Insurance Corporation, (LIC) was accused of having introduced fake and false insur-
ance proposals to the Corporation. The proposals were forged in the name of non-existent persons by the
accused in his own handwriting. The accused sought to take advantage of his inflated business by introduc-
ing the fake proposals to gain promotions. Although, the accused himself did not gain any benefit, there was
loss to the LIC for issuance of insurance policies, even if this was only a negligible sum. According to the
Supreme Court, such fake or forged proposals are bound to affect the reputation of the insurance company.
Hence, his conviction for the offence of conspiracy to cheat was upheld.

Sustaining Loss not Criterion for Establishing the Offence of Cheating

In State v Ramados Naidu ,41 the accused persons had obtained loans from the Land Development Bank for
digging new wells in their agricultural lands and purchasing new oil engines without act ually doing any of
these things. However, the bank had not suffered any loss on account of these transactions, as the loans
were fully covered by the security of immovable properties and the loans had been repaid in full. Neverthe-
less, the accused were convicted for cheating under ss 415 and 420.
The Madras High Court observed that the following three ingredients have to be established in the offence of
cheating: First, there has to be practice of deception by the offender. Secondly, on account of the deception,
there must be fraudulent or dishonest inducement so as to make the person deceived to deliver any property
or to do something or omit to do something, etc. Lastly, by reason of delivery of the property or the doing of a
thing or the omission to do a thing, there must be the causing of, or the likelihood of the causing of, damage
or harm to the person deceived in body, mind, reputation or property. Thus, as a result of the dishonest in-
ducement of a person, there can be either wrongful loss to the person deceived or wrongful gain to another,
including the person practicing the deception. Whenever any one of these results follows on account of the
deception practiced by a person, then the offence of cheating would be complete.
In the above case, the accused persons obtained loans from the bank by making fraudulent representation to
the bank. Therefore, even though each advancement of loan was made on the security of property and on
account of it there had been no loss to the bank, yet it follows that each of the borrowers had made a wrong-
ful gain to himself by making dishonest representation to the bank in getting the loan amount, therefore, the
borrowers in each case had committed the offence of cheating.

CIVIL LIABILITY VERSUS CRIMINAL LIABILITY

The crucial aspect to be noted in the law relating to cheating is the intention of the person accused of cheat-
ing. Most often, especially in issues relating to commercial transactions, the disputes are difficult to separate
in terms of their civil and criminal liabilities. As stated earlier, the crucial difference between a criminal cause
of action as against a purely civil transaction is the intention of the person at the time when the cause of act
ion arose or the alleged offence commenced. The important aspect is to examine whether at that stage, the
accused deliberately or intentionally induced the other person to part with property or to do an act or desist
from doing an act, or whether it was only subsequently that the dispute arose. No clear-cut rule can be
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evolved in this regard, and the facts and circumstances of each case will determine the way in which a par-
ticular issue can be addressed by courts.

VEXATIOUS CRIMINAL PROCEEDING IN CIVIL DISPUTE: IMPOSITION

OF COSTS
In Nageshwar Prasad Singh @ Sinha v Narayan Singh ,42 the respondent-complainant, Narayan Singh, an
advocate, had entered into an agreement of sale of certain properties with the accused in Patna city. Part of
the consideration had been paid as earnest money. Possession had also been delivered to the complainant
as per the sale deed. However, the complainant had not made the full payment as agreed upon, resulting in
delay in completing the legal formalities of the sale. The complainant had also filed a civil suit for specific
performance against the accused. Thereafter, the complainant filed a criminal complaint alleging committing
of offence under s 420, IPC. The Supreme Court considered illust (g) to s 415, IPC, and stated that the latter
part of the illustration showed that:

... [A]t the time when the agreement for sale was executed, it could have in no event been termed dishonest so as to
hold that the complainant was cheated of the earnest money, which they passed to the appellants as part considera-
tion, when possession of the total land involved in the bargain was passed over to the complainant-respondent, and
which remains in their possession. Now, it is left to imagine who would be interested in delaying the matter in complet-
ing the bargain when admittedly the complainants have not performed their part in making full payment.43

Thus, the apex court held that the liability, if any, was only civil in nature and not criminal. It not only quashed
the criminal proceeding, but also imposed compensatory cost of ten thousand rupees on the respond-
ent-complainant for the vexatious proceeding.

PUNISHMENT FOR CHEATING

Section 417. Punishment for cheating.--Whoever cheats shall be punished with imprisonment of either
description for a term which may extend to one year, or with fine, or with both.
Section 420. Cheating and dishonestly inducing delivery of property.--Whoever cheats and thereby
dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy
the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable of
being converted into a valuable security, shall be punished with imprisonment of either description for a term
which may extend to seven years, and shall also be liable to fine.
Section 415 of the defines the offence of cheating, which is made punishable by ss 417 and 420, IPC. Sec-
tion 417 provides punishment for a simple case of cheating, whereby, the person cheated is injured other-
wise than by being induced to part with property.44 The second part of s 415 not involving fraud or dishonesty
is thus made punishable leniently as compared with the maximum sentence provided for the offence consti-
tuted by the first part of the section.

&
Section 420 deals with certain aggravated forms or specified classes of cheating. It deals with cases of
cheating, whereby, the deceived person is dishonestly induced: (a) to deliver any property to any person; or
(b) to make, alter or destroy: (i) the whole or any part of a valuable security; or (ii) anything which is signed or
sealed, and which is capable of being converted into a valuable security.45 It is required to prove that the
complainant has parted with the property due to dishonest inducement of the accused. 46 The property so de-
livered must have some money value to the person cheated.47
The terms of punishment provided for in both the provisions vary. Thus, while s 417 provides for imprison-
ment of a term which may extend to a year, or fine or both, an offence under s 420 becomes liable for a sen-
tence of imprisonment for a term up to seven years with fine. It should be noted that fine is an optional pun-
ishment under s 417, whereas for offence under s 420, once conviction is recorded and sentence of impris-
onment awarded, fine also has to be imposed.
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Another distinction needs to be noted between ss 417 and 420. While both are penalising sections, it is said
that if delivery of property is obtained fraudulently, then the offence is punishable by s 417; on the other
hand, if the property delivered is due to dishonesty, then it will be covered by s 420. Hari Singh Gour pro-
vides the following situation to illustrate this difference:

[
A, may by false representation, induce B to advance him a sum of money in such circumstances that A is aware that he
is exposing B to risk of loss but without intention of causing him wrongful loss. A then would be acting fraudulently and
would be punishable only under s 417, IPC. However, if he intended to cause wrongful loss, he would be act ing dis-
honestly and would be punishable under s 420, IPC.48

CHEATING BY PERSONATION 416 + 419

Section 416. Cheating by personation.--A person is said to "cheat by personation" if he cheats by pre-
tending to be some other person, or by knowingly substituting one person for another, or representing that he
or any other person is a person other than he or such other person really is.
Explanation.--The offence is committed whether the individual personated is a real or imaginary person.
Illustrations

C(a)
(b)
A cheats by pretending to be a certain rich banker of the same name. A cheats by personation.
A cheats by pretending to be B, a person who is deceased. A cheats by personation.
Section 419. Punishment for cheating by personation.--Whoever cheats by personation shall be pun-
ished with imprisonment of either description for a term which may extend to three years, or with fine, or with
both.
Section 416 defines the offence of cheating by personation and s 419 provides punishment therefor. There-
fore, to convict a person under s 419, it is necessary to prove the elements of s 416. 49 However, it is not
necessary to prove who was being impersonated, for the person impersonated could be an imaginary per-
son, non-existent or unknown.50 However, what has to be established is that the accused impersonated
somebody, or else the offence is not established.51 As to the form of impersonation, the section does not
elaborate on whether it is through words spoken, or dress or by conduct.

CHEATING OUT OF FIDUCIARY RELATION

Section 418. Cheating with knowledge that wrongful loss may ensue to person whose interest of-
fender is bound to protect.--Whoever cheats with the knowledge that he is likely thereby to cause wrongful
loss to a person whose interest in the transaction to which the cheating relates, he was bound, either by law,
or by a legal contract, to protect, shall be punished with imprisonment of either description for a term which
may extend to three years, or with fine, or with both.
Section 418 prescribes punishment for cheating by persons standing in fiduciary or financial capacity to the
person cheated, as for example, the nature of relationship between banker and customer, the principal and
agent, a guardian and ward, trustee, director of company, advocate and client and so on. Liability under this
section arises when a person in such a fiduciary or responsible capacity makes a statement knowing it to be
false at the time of making it, and making it with the dishonest intention of cheating another. 52
However, when there was no intention to cheat, this offence cannot be established. Thus, in S Shankarmani
& Ors v Nibar Ranjan Parida ,53 a bank intended to take a house on hire, because of which the landlord in-
curred a huge expense to furnish the house. However, for reasons beyond the control of the bank officials,
the house could not be taken on rent. At no stage was there any intention to deceive the landlord. Hence, it
was held that the offence of cheating was not made out.
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PROPOSALS FOR REFORM

The Fifth Law Commission proposed the following three major reforms. They are:

(1) The term 'harm to that person', appearing in the latter part of s 415, which enabled the courts to
stretch its meaning in the situations wherein no tangible harm to the person deceived was ap-
parent though the offender had taken some undue and unfair advantages from him, and creat-
ed difficulty for them in deciding cases of 'cheating' when 'harm' was caused to somebody else
other than the person deceived, should be substituted by 'harm to person'.
(2) Dishonest non-disclosure of facts by a person who is bound by law to disclose them should be
brought within the definition of 'deception' and it should be expressly mentioned in the explana-
tion to s 415 as the term 'concealment' has caused some confusion.
(3) Two new sections (ss 420A and 420B) should be inserted to respectively tackle the problem of
cheating of government on a large scale by dishonest contractors while supplying goods or
executing works and of increasing commercial corruption. These proposed offences should be
respectively made punishable by simple or rigorous imprisonment for a term up to ten and
three years.54
The Indian Penal Code (Amendment) Bill 1978 gave effect to most of these proposals for reform. Clause 177
of the Bill sought to revise s 415 of the IPC to redefine 'cheating' on the lines suggested by the Law Commis-
sion. Clause 178 of the Bill sought to: (i) substitute the existing s 420 by a section with the changes sug-
gested by the Law Commission, (ii) insert s 420A (relating to cheating of public authorities in performance of
certain contracts and worded on the lines suggested by the Law Commission), (iii) insert s 420B (relating to
publication of false advertisements), and (iv) insert s 420C (relating to fraudulent acts of in relation to proper-
ty of a company and drafted on the lines suggested by the Law Commission). The Fourteenth Law Commis-
sion has endorsed the proposed changes.55
However, these proposals for reform could not become effective as the 1978 Bill lapsed in 1979.

1 Ramnarayan Popoli v CBI (2003) 3 SCC 641; see also, Hira Lal Hari Lal Bhagwati v CBI (2003) SCC 1121; Iridium India tel-
ecom Ltd v Motorola Incorporated AIR 2011 SC 20, (2011) 1 SCC 74.

2 Divender Kumar Singla v Baldev Krishna Singla AIR 2004 SC 3084, (2005) 9 SCC 15.

3 AIR 1970 SC 843, (1970) Cr LJ 849(SC) .

4 Ibid, para 6.

5 AIR 1974 SC 1811, (1974) Cr LJ 1261(SC) .

6 Ibid, para 3; see also, Hridaya Ranjan Prasad Verma v State of Bihar (2000) 4 SCC 168, (2000) Cr LJ 2983(SC) ; GV Rao v
LHV Prasad AIR 2000 SC 2474, (2000) 3 SCC 693; SW Palanitkar v State of Bihar (2002) 1 SCC 241;, AIR 2001 SC 2960; Ku-
riachan Chacko & Ors v State of Kerala (2008) 8 SCC 708; V P Shrivastava v Indian Explosives (2010) 10 SCC 361, 2010 (10)
SCALE 177; Iridium India Telecom Ltd v Motorola Incorporated AIR 2011 SC 20, (2011) 1 SCC 74.

7 Ramantar v Hari Ram (1982) Cr LJ 2266(Gau) ; Gurucharan Singh v Suresh Kumar Jain (1988) Cr LJ 823(Del) .

8 Hatiram Nayak v Surendra Kumar Mallik (1986) Cr LJ 1271(Ori) ; State v Raadoss Naidu (1977) Cr LJ 2048(Mad) ; G Lax-
minarayan Naidu v Chitibonia Yerraiah (1985) Cr LJ 1839(Ori) .

9 (1995) Cr LJ 1810 (Del).

10 Narayan Das v State of Orissa AIR 1952 Ori 149, (1952) Cr LJ 772(Ori) ; Ram Nath v State of MB AIR 1951 MB 100, (1952)
Cr LJ 664(MB) .

11 V Y Jose v State of Gujarat (2009) 3 SCC 78, 2008 (16) SCALE 167; Devendra v State of Uttar Pradesh (2009) 7 SCC 495,
2009 (7) SCALE 613; SVL Murthy v CBI AIR 2009 SC 2717, (2 0090 6 SCC 77.

12 Surendra Meneklal v Bai Narmada AIR 1963 Guj 239.

13 Banwarilal v State of Uttar Pradesh AIR 1956 All 341, (1956) Cr LJ 664(All) .
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14 State of Manipur v LB Singh AIR 1954 Mani 13, (1954) Cr LJ 1714(Mani) ; G Laxminarayan Naidu v Chitiboina Yerraiah
(1985) Cr LJ 1839(Ori) ; Radha Krishna Dalmiya v Narayan (1989) Cr LJ 443(MP) .

15 (1991) Cr LJ 2808 (MP) (DB).

16 KC Thomas v A Varghse (1974) Cr LJ 207(Ker) ; Vadivel v Packialakshmi (1996) Cr LJ 300(Mad) .

17 (1994) Cr LJ 2238 (Mad).

18 (1992) Cr LJ 1675 (Mad).

19 Dibesh Sarkar v State of West Bengal (1989) Cr LJ 30(Cal) (NOC) .

20 Hari Majhi v State of West Bengal (1990) Cr LJ 650(Cal) ; Jayanti Rana Panda v State (1984) Cr LJ 1535(Cal) ; Bipul Mehdi
v State of Assam (2008) Cr LJ 1099(Gau), 2006 (3) GLT 585.

21 AIR 1999 SC 2332.

22 Ibid, para 8.

23 (1998) 8 SCC 745.

24 AIR 1999 SC 1216, (1999) 3 SCC 259.

25 AIR 1999 SC 1216, (1999) 3 SCC 259, para 11.

26 SW Palnitkar v State of Bihar (2002) 1 SCC 241, AIR 2001 SC 2960; Suryalakshmi Cotton Mills Ltd v Rajvir Industries Ltd
(2008) 13 SCC 678, AIR 2008 SC 1683.

27 Ajay Mitra v State of Madhya Pradesh AIR 2003 SC 1069, (2003) Cr LJ 249(SC) ; Harmanpreet Singh Ahluwalia v State of
Punjab (2009) 7 SCC 712, (2009) Cr LJ 3462(SC) .

28 AIR 1974 SC 301, (1974) Cr LJ 352(SC) ; see also Indian Oil Corporation v NEPC India Ltd (2006) 6 SCC 736, AIR 2006 SC
2780.

29 Mahadeo Prasad v State of West Bengal AIR 1954 SC 724, (1954) Cr LJ 1806(SC) .

30 Tulsi Ram v State of Uttar Pradesh AIR 1963 SC 666, (1963) 1 Cr LJ 623(SC) .

31 Shivanarayan Kabra v State of Madras AIR 1967 SC 986, (1967) Cr LJ 946(SC) .

32 AIR 1974 SC 1560, (1974) Cr LJ 1026(SC) .

33 See also, Med Chi Chemicals & Pharma Ltd v Biological E Ltd (2000) 3 SCC 269, AIR 2000 SC 1869.

34 Ramji Lakhamsi v Harshadrai AIR 1960 Bom 268, (1960) Cr LJ 812(Bom) .

35 Legal Remembrancer v Manmatha Bhusan Chatterjee AIR 1924 Cal 495; Rudrapal Singh v Rex AIR 1950 All 609.

36 Prem Chand v State of Uttar Pradesh AIR 1953 All 381.

37 Ratan Singh v Emperor AIR 1934 Lah 833; Harendra Nath Das v Jotish Chandra Dutta AIR 1925 Cal 100; Ramji Lakhamsi v
Harshadrai (1959) 61 Bom LR 1648.

38 AIR 1970 SC 843, (1970) Cr LJ 849(SC) .

39 (1975) Cr LJ 173 (Bom).

40 AIR 1998 SC 296.

41 AIR 1970 SC 843, (1970) Cr LJ 849(SC) .

42 AIR 1999 SC 1480.

43 Ibid, para 3.

44 Anilesh Chandra v State of Assam AIR 1951 Assam 122.

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45 Banwarilal Agarwal v A Suryanarayan (1994) Cr LJ 370(Ori) ; A Jayaramand v State of Andhra Pradesh (1995) Cr LJ
3663(SC) ; Premlata v State (1998) Cr LJ 1430(Raj) ; Iir Prakash Sharma v Anil Kumar Agarwal (2007) 7 SCC 373, 2007 (9)
SCALE 502; Sharon Michael v State of Tamil Nadu (2009) 3 SCC 375, 2009 (1) SCALE 627; Dalip Kaur v Jagnar Singh AIR
2009 SC 3192, (2009) 14 SCC 696.

46 Sonbhandra Coke Products v State of Uttar Pradesh (1994) Cr LJ 657(All) .

47 Abhayanand Misra v State of Bihar AIR 1961 SC 1698; Nrisingha Murari Chakraborty v State of West Bengal AIR 1977 SC
1174, (1977) Cr LJ 961(SC), (1977) 3 SCC 7.

48 Hari Singh Gour, Penal Law of India, vol 4, 11th edn, Law Publishers, Allahabad, 1998, at p 4200.

49 Thakur Mandal v Emperor AIR 1942 Pat 43.

50 Re K Rama Rao AIR 1960 Andh Pra 441.

51 State of Madhya Pradesh v Padam Singh (1973) MPLJ 129; Benediet Balanathan Mahendran v State of Tamil Nadu (1996)
Cr LJ 2619(Mad) .

52 Mobarik Ali Ahmed v State of Bombay AIR 1957 SC 857, (1957) Cr LJ 1346(SC) .

53 (1991) Cr LJ 65 (Ori).

54 See Law Commission of India, 'Forty-Second Report: The Indian Penal Code ', Government of India, 1972, paras
17.41-17.45.

55 See Law Commission of India, 'One Hundred and Fifty-Sixth Report: The Indian Penal Code,' Government of India, 1997,
paras 12.75 & 12.76.

PSA Pillai: Criminal Law,12th Edition/PSA Pillai Criminal Law 2014/CHAPTER 46 Mischief

CHAPTER 46

Mischief

(Indian Penal Code 1860,Sections 425 to 440)

LAW RELATING TO MISCHIEF: AN OVERVIEW

Sections 425 to 440 of the Penal Code lay down the law relating to 'mischief'. Section 425 defines the of-
fence of mischief, while s 426 provides punishment therefor. The succeeding 14 sections cover the aggra-
vated forms of mischief differing in terms of punishment, depending on the value of the wrongful loss or
damage of the property. Based on this criterion (of value of damage), the IPC prescribes punishment of
greater severity. It may be noted that the varying degrees of punishment has reference to the amount of loss
sustained, an aspect not admitted in determining the degree of criminality in other offences. However, it is
not the only circumstance of aggravation, for the Code recognises the following as equally aggravating:

(1) Value of the property destroyed (ss 427- 429);

(2) Mode of mischief, by killing, poisoning or by fire or explosives, or after preparation to cause hurt
(ss 428 and 440);
(3) Utility of the subject of mischief, eg public roads, bridges, rivers, channels, or works of irrigation
(ss 430 and 431), houses (s 436), ships (s 437) etc;
(4) Probable consequences of mischief--by the destruction of land-marks, light-houses, etc (ss 432
and 433).
These four aggravated offences of mischief, in turn, can be seen to be comprised of the following seven
types of offences: